UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 15, 2007
PEOPLES EDUCATIONAL HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
000-50916 41-1368898
(Commission File Number) (I.R.S. Employer Identification No.)
299 MARKET STREET
SADDLE BROOK, NJ 07663
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (201) 712-0090
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On February 15, 2007, Peoples Educational Holdings, Inc. (the "Company") and
Peoples Education, Inc. ("PE"), a wholly owned subsidiary of the Company,
entered into a credit facility with Sovereign Bank (the "Bank"). The Company is
the borrower under this facility, and PE has guaranteed the performance of the
Company's obligations.
The facility consists of a revolving line of credit and a term loan:
- The revolving line of credit provides for advances up to $10 million
and expires on March 1, 2012. The interest rate on the revolving line
of credit is in a range from LIBOR plus 2.0% to LIBOR plus 2.25%, or
prime to prime plus 0.5%, with the exact interest rate based on the
ratio of the Company's Total Funded Debt to EBITDA (as such terms are
defined in the credit agreement).
- The term loan is for $10 million and matures on December 31, 2012. The
term loan provides for payments of interest only for the first twelve
months and for 20 equal quarterly payments of principal and interest
thereafter until maturity. The term loan bears interest at the same
rate as the revolving line of credit.
Borrowings under the facility are secured by substantially all of the assets of
the Company and PE. The credit agreement contains certain financial covenants,
calculated on a consolidated basis for the Company and its subsidiaries, which,
among other things, impose a maximum ratio of total funded debt to EBITDA, and a
minimum fixed charge coverage ratio. These financial covenants restrict the
payment of dividends on the Company's common stock.
On February 15, 2007, the Company borrowed $1.5 million under the revolving line
of credit and $10.0 million under the term loan, and used such funds to repay
prior bank debt. The interest rate under the revolving line of credit and the
term loan was 7.55% at February 15, 2007.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
On February 15, 2007, upon entering into the credit facility with the Bank, the
Company and PE terminated their prior credit facility with Manufacturers and
Traders Trust Company. In connection with this termination, the Company and PE
repaid all amounts borrowed under the credit facility with Manufacturers and
Traders Trust Company. The information set forth in Item 1.01 above is
incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth in Item 1.01 above is incorporated herein by
reference.
ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
The information set forth in Item 1.01 above with respect to certain
restrictions under the credit agreement on the payment of dividends is
incorporated herein by reference.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits:
Exhibit 10.1 Loan Agreement dated February 15, 2007, by and between
Peoples Educational Holdings, Inc. and Sovereign Bank
Exhibit 10.2 $10 million Revolving Credit Promissory Note dated February
15, 2007 payable by Peoples Educational Holdings, Inc. to
Sovereign Bank
Exhibit 10.3 $10 million Term Promissory Note dated February 15, 2007
payable by Peoples Educational Holdings, Inc. to Sovereign
Bank
Exhibit 10.4 Security Agreement dated February 15, 2007, by and between
Peoples Educational Holdings, Inc., Peoples Education, Inc.
and Sovereign Bank
Exhibit 10.5 Guaranty and Suretyship Agreement dated February 15, 2007,
by Peoples Educational Holdings, Inc. and Peoples Education,
Inc. in favor of Sovereign Bank.
Exhibit 10.6 Pledge of Stock Agreement dated February 15, 2007, by
Peoples Educational Holdings, Inc. in favor of Sovereign
Bank.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PEOPLES EDUCATIONAL HOLDINGS, INC.
(Registrant)
By: /s/ Brian T. Beckwith
------------------------------------
Name: Brian T. Beckwith
Title: President and Chief Executive
Officer
Date: February 21, 2007
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